Oil stabilizes after heavy losses due to recession fears

Oil prices stabilized on Thursday, after Wednesday’s decline reflected the supportive impact of a sudden production cut by the Organization of the Petroleum Exporting Countries this month.

By 1033 GMT, Brent crude was trading at $77.72 a barrel, up three cents, or 0.04 percent. US West Texas Intermediate crude also rose a cent, or 0.01 percent, to $74.31 a barrel.

Prices stabilized after Russian Deputy Prime Minister Alexander Novak described oil markets on Thursday as balanced.

Novak said that the OPEC + group does not see a need to further reduce oil production, but it is always able to adjust its policy.

This rise comes after oil prices fell nearly four percent on Wednesday, after growing fears of a recession in the United States, the world’s largest economy, overshadowed a drop in US crude inventories more than expected.

Spending on capital goods in the US fell more than expected in the latest data released on Wednesday night.

Analysts believe that the weak profit margins of refineries mainly contribute to the decline in oil prices.

Sources told Reuters that Russia had increased its exports of refined products despite an embargo imposed by the European Union and a cap on its oil prices.

Ole Hansen, head of commodities strategy at Saxo Bank, said lower refinery margins could lead to lower flows and further lower demand for crude.

Markets will determine the direction from the first quarterly GDP growth in the Eurozone due on Friday. The data may influence monetary policy decisions of the European Central Bank, which holds its monetary policy meeting on May 4th.